Economic Growth Strong In Both United States, Canada

Connecting the Dots monitors all major economic announcements in the United States and Canada, but MSCI also offers industrial metals industry-specific data products that provide much deeper analysis. Visit MSCI’s website and click on industry data to learn more about our Metals Activity Report (MAR), Momentum Monitors, and Economic Pulse.

Meanwhile, here are the major economic headlines from the last week:

• The Canadian economy expanded 0.5 percent in the second quarter after rising 0.4 percent in the first. Higher government expenditures, business investment in engineering structures and machinery and equipment, and household spending on services all added to gross domestic product (GDP) while declines in exports, residential construction, and household spending on goods detracted from it.
• The U.S. economy expanded at a three percent annualized rate in the second quarter after rising 1.4 percent in the first. That reading was slightly better than the 2.8 percent growth rate the government initially announced. Higher consumer spending was largely responsible for the improvement. In related news: the Conference Board reported a sharper-than-expected 0.6 percent decline in its S. Leading Economic Index (LEI) for July. The LEI is a key gauge of future growth. July’s drop, which followed a 0.2 percent dip in June, was driven by declines in new orders, weak consumer expectations, and slow building permits and manufacturing hours. There was some good news, however: the LEI’s six-month annual growth rate is no longer pointing to a recession.
• The Canadian economy shed 43,000 jobs in July. That decline followed five consecutive monthly increases, so the cumulative gain from the first six months of 2024 still represented 147,600 net jobs created. Job vacancies in June were little changed at 554,000. Vacancies were down by 190,500 from June 2023 to June 2024. Read the full report here.
• Regional manufacturing readings continued to show difficult conditions in the sector during August. Indeed, manufacturing in the mid-Atlantic region stalled last month. The Federal Reserve Bank of Richmond’s composite manufacturing gauge fell to -19 in August from -17 in July. Firms were less optimistic about local business conditions even though they said they expect shipments and new orders to improve in the coming months. The Federal Reserve Bank of Dallas reported the manufacturing sector in Texas remained in contraction territory for the 28th consecutive month. There was some good news, however. The bank’s general business activity index improved to -9.7 in August from -17.5 in July, and is at its highest level since January 2023. The production index was up three points to +1.6 and readings for new orders and shipments also rose. Finally, the Federal Reserve Bank of Kansas City’s composite index was -3 in August, up from -13 in July. Nondurable manufacturing was essentially flat, while durable goods manufacturing fell somewhat driven by weaker readings from the transportation equipment, fabricated metal, and machinery sectors.
• S. housing market readings were mixed last month. Sales of new homes increased 10.6 percent from June 2024 to July 2024 and 5.6 percent year-over-year. Sales of U.S. existing homes rose 1.3 percent for the month of July, but fell 2.5 percent year-over-year.
• The United States’ core personal consumption expenditures price index, a critical gauge of inflation that the Federal Reserve uses to set interest rate policy, increased 0.2 percent from June 2024 to July 2024, its slowest rise in a year. Real consumer spending was up by 0.4 percent, meanwhile.
• The number of people who applied for U.S. unemployment benefits for the first time stood at 231,000 during the week that ended Aug. 24, a figure that was down by 2,000 from the week before. Averaged over the past four weeks, first-time claims fell to 231,500. In all, nearly 1.868 million people claimed jobless benefits during the week that ended Aug. 17.
• In other economic news: the Conference Board’s index of consumer confidence rose to a six-month high of 103.3 in August due to improved views of the economy and the likelihood of Federal Reserve interest rate cuts; the University of Michigan’s consumer sentiment reading increased from 66.4 in July to 67.9 in August; and Canadian retail sales fell 0.3 percent in June due to declines in four of nine subsectors, including motor vehicle and parts dealers.